Are noncompete clauses getting out of control?

You've just been fired, or quit, and it's time to job hunt again. But on your way out the door, your new former employer confronts you with an uncomfortable reality that sounds something like this: "You'll never work in this town again."

What now?

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It's not an idle threat. Noncompete agreements used to be for executives or highly paid engineers with brains full of intellectual property. But increasingly, corporations are shackling all kinds of workers—hairdressers, tutors, camp counselors—with employment agreements that ban them from working for competitors for a year or two after terminating employment.

The agreements often mean newly unemployed workers can't get a job in their chosen field without moving away from their hometowns.

"It wasn't mentioned until I was filling out the tax paperwork, and it was treated like it was no big deal. ... I didn't even give it a second thought," said one out-of-work tutor who asked not to be identified because she thought it would hurt her job prospects. "They did make sure to remind me about it when I quit working for them. ... I was told I could not work for a competing tutoring company and I could not privately tutor students."

Noncompetes have been spreading through industries for years, but are getting a closer look recently. In April, Massachusetts Gov. Deval Patrick proposed banning some kinds of noncompetes in the state. Some in the tech community say Massachusetts is losing out on tech start-up money to California, which already bans many types of noncompete agreements.

"The opposition likes the status quo because it's often a tool for wage suppression," wrote Bijan Sabet, a Boston-based venture capitalist, in support of the Patrick's proposal. "Non-competes stifle innovation because the companies can't hire the best talent. Silicon Valley companies hire the best people without limitation. It's a big problem if you can't hire the best and brightest."

Increasingly, disagreements over the agreements are ending up in court.

Thomas Geoghegan, a Chicago-based lawyer representing a group of emergency roadside assistance workers, filed a class-action lawsuit against AAA contractor Club Assist over a number of issues, including a noncompete agreement.

"What's the trade secret to changing a tire?" he said. "It's abusive. It's a way of keeping employees under control. This is the new American workplace."

"There are a bunch of survival strategies that employees fearing their noncompete liabilities take: They lay low, don't show up to professional conferences after they've left the first employer, sever relationships with former co-workers, hide out. All of which are not a recipe for a vibrant professional community," she said.

But employees such as the tutor mentioned in this story shouldn't simply accept that they have to change professions—or hide—in order to be gainfully employed. Scott Behren, a Florida employment law expert who specializes in noncompete cases, says there's a number of things workers can do both before and after they leave their jobs to make landing a new job easier.

Workers can accept a new position and sign an indemnity clause with their new employer holding them harmless, and see if the old employer tries to enforce the agreement with a lawsuit, he said.

Proactively, a worker can have a lawyer draft an opinion letter to the old employer, stating the noncompete is unenforceable or overly broad.

Court decisions vary wildly around the country, but generally judges will disallow noncompete provisions that are considered overly broad—either in their time frame or their geographic limitations. Noncompetes must involve a "protectable business interest," Behren said. Front-line workers don't usually have access to trade secrets or other protectable intellectual property, he said.

Former workers can also file with a local court asking for "declaratory relief," that the provision be struck down or modified. Corporations will often settle out of court after such filings, he said, fearing the creation of case law that is unfavorable.

More hardball tactics can involve filing cases for wrongful termination, discrimination or some other workplace violation that lead to dissolving all terms of an employment agreement.

On the other side of the spectrum, workers can also try to negotiate with their former employer.

"There are lots of smart employers who understand that despite having required a noncompete, being litigious against your former employees hurts their recruitment efforts and their reputation as a great place to work," Lobel said. "If that's the case, negotiations, formal or informal, can work."

Perhaps the best time to think about noncompetes—as with prenuptial agreements—isn't at the end of a relationship, but rather the beginning.

"(Some) companies are caught up in what I call in (my) book a control mentality, thinking of any former employee as a threat," said Lobel. "It's a good idea when possible to figure out ahead of time which company is which when accepting a position."